Following recent questions on CEO.ca about Aton Resources' plans, I had a conversation with exploration manager Javier Orduña on the topic. Read on for more. Thanks @Guy for the questions! 

Peter Bell: Hello, I'm Peter Bell and I'm here with Javier Orduña from Aton Resources. Hello Javi!

Javier Orduña: Hi Peter.

Peter Bell: I have a few questions for you from the internet here about corporate strategy for Aton and things happening in Egypt. The first one is about the timeline for processing Aton's request for an exploitation license. What can you tell us?

Javier Orduña: Well, our CEO Mark Campbell is the probably the best person speak to about this things but I'll tell you what I can. I know some people have been asking why have we applied for an exploitation license at this particular time with all the legislative changes going on. Well, there's a lot going on. There's no single, simple answer but the answer I like best is twofold. One, the legislative reform is ongoing. A year ago we said it's going so fast we can't believe it, but we don't seem to have progressed any further. The laws were signed during the summer break in July or August and we're still waiting for you executive regulations, which were meant to be out three months after the laws were signed. They haven't come yet, although they were legally required to have been issued by October or November. They haven't been and we we don't know when they're gonna come. We're confident they're going to be a whole lot better than what we got now with profit sharing and the cost recovery mechanism, but we frankly just don't know. There's a lot of competing interests within the bureaucracy and the broader system. We just don't know what it's going to look like, so we cannot sit back and assume everything's gonna be wonderful and it's gonna work out in our favor. If you refer back to a press release at the beginning of April when we'd been granted another year's extension to the final exploration phase of the Abu Marawat Concession license, then you'll see that we're now in the final exploration phase of the license and that is due to expire in March 2020. The license is due to expire in March. Mark has always said, and I'm sure he's right, that they would not kick us off -- we would be able to get the license renewed -- but we can't come out to investors and our backers to say "Don't worry about it, they're never gonna kick us off." In practice, that may be the case but we can't raise money and attract investment saying that sort of stuff. Essentially, what this is about is securing our tenure of the license.

Javier Orduña: Once we get the exploitation licenses, assuming we are granted it, that gives us a 20-year exploitation period on the exploitation license, which will cover Hamama and be extendable for another ten years. Plus, it gives us the option to retain our selected exploration areas for a four year period; 2 years plus another 2 years. The aim of the exercise is essentially to secure a license both for Hamama, which we would look to look to develop in the longer run and also to secure the remainder of the areas that we want to keep, specifically Rodruin and a bunch of the other exploration areas that we want.

Javier Orduña: I won't insult anyone's intelligence -- we haven't had the year we wanted to have this year. Things have not progressed and we haven't been back drilling at Rodruin. The reason is we haven't been able to raise the money to do it. That's the reality and I'm sure everyone appreciates that. Some of the reasons we haven't been able to do that is the question about the license -- people aren't sure what's going to happen. We believe that once we have the security and tenure of the license tied-down, then it will put us in a much better position to go raise money and push our projects towards. We believe that based on talking to local investors and others around the world.

Javier Orduña: Why are we doing it now when new regulations are coming? We have to secure the license now, as I've explained, but our legal advice is that once new regulations come out, assuming they're better as we expect them to be, then we should be able to roll over to them. That remains to be confirmed. I might be an explorationist, but I don't have a crystal ball and I can't tell you how it is eventually going to wash out. We believe that if new mining laws come into play, then we will be able to roll our agreement over to the new system.

Peter Bell: Thank you. The point about the extensions and the ability for you to pick what you want to hold on to as exploration ground was a really interesting and subtle thing that switched a light switch for me. That sounds like a good way within the existing framework for you to keep a hold of the ground that you have, potentially by making a series of commercial discoveries.

Javier Orduña: Yes, and the concession agreement was signed into law in 2007. Under the terms of concession agreement, I think there was three exploration periods that were extended due to force majeure associated with the revolution in Egypt. We've undergone three relinquishments of ground at Abu Marawat -- one since I've been there, one just before I arrived in 2016, and another way back around 2011. As we move through the various exploration phases, we're now in the final exploration phase and. Basically, at the end of the exploration phase we have to make it commercial. Then you apply for the exploitation license and that's what we're doing now.

Javier Orduña: The exploitation license will specifically cover the Hamama West area. It will also cover you know the entire strike length of the Hamama mineralized horizon -- six kilometers of it which may potentially host mineralization. It covers Central, East, and also West Garida. We've got 20 years, effectively, to develop Hamama. The idea is to start the economic analysis we've done on a small open pit, heap-leach project. We probably look to use that as a starter operation with a view to generating cash flow. Then, developing the rest of the resource and hopefully other resources in that general area later.

Peter Bell: That answers the question, what you intend to do if and when the exploitation license is received?

Javier Orduña: Well, I can't tell you the specific corporate strategy. That's above my pay grade. I know what I'd like to do. We've done the PEA on the heap leach project at Hamama West and it shows a pretty tidy little financial return. That's only the top of the top of the deposit. Of course, we have the sulphide resource under that. My vision -- as I say, it's my vision rather than what we are definitively going to do -- I look to start off with a small-scale operation on the oxide gold cap for a heap leach operation to give us time and cash flow, then do the further work that's required to do to develop much larger sulphide resource underneath the oxide cap.

Javier Orduña: We haven't done much of anything at Rodruin this year, as I mentioned because we haven't had sufficient funds to get back and drill, but that still remains our number target. We still believe that's possibly the most advanced and best exploration target. Again by going for exploitation and getting another four years exploration license over the other areas hopefully allows us to generate the funding to take projects like Rodruin, Abu Gaharish, and all these other areas forward. It's up to people who believe our story and want to inject money into the company, but that is what we want to do.

Peter Bell: Do you have any sense of a timeline on the exploitation license getting returned?

Javier Orduña: There is a specific clause in the concession agreement that requires EMRA to make a decision within a fairly short period of time. I'm not going to tell you exactly what it is, but it's a fairly short period of time after we submitted our application for the exploitation license. We submitted that at the end of October and gave a formal presentation to EMRA, which was very well received. I have to say there was a lot of positivity from their side. Frankly, it's in their interest, politically, to issue it. As well in ours! As Mark says, there haven't been too many of these issued over time and they'd like to show that they've actually achieved something for the gold mining industry in Egypt, especially with everything that is going on now. I can't tell you when it's when it's gonna be -- I can't tell you whether they will come back within the timeframe it is stipulated, but we're talking a small number of months in which they're required to respond. It is a short period of time. It could happen quite soon -- I'm not saying it will -- but it's not inconceivable that they could come back to us before the end of this year. It's not inconceivable they might not come back to us until the middle of next year, either! Again, this is crystal ball gazing. If they do come back to us in the timeframe the concession agreement stipulates, which they're meant to follow, then it should be pretty soon.

Peter Bell: Wonderful. With everything heating up out there in Q4-2019 and record-breaking M&A deals compared to in recent years and Centamin being pursued there -- Egypt is making headlines in the gold mining industry around the world. Great time to be working and trying to move this forward.

Javier Orduña: I think the whole Centamin thing is very interesting from my perspective, personally. I think it's telling that it is Endeavor, which is 30% owned by Naguib Sawiris. Mark talks to him from time to time and I have talked to his exploration guys on a reasonably regular basis. They certainly like our ground. The fact that Endeavor are looking at investing in Egypt is noteworthy because he has intimated that he would like to invest in gold mining in Egypt, but he's not prepared to do it until he believes that legislation is being reformed in a way that is appropriate. The fact that he's now effectively bidding for Centamin is a really significant event. It shows that he has confidence things are going in the right direction and I think that can only be a good thing for Egypt. Hopefully it'll be a good thing for us as well.

Peter Bell: Wonderful to see you in that position where you are potentially agitating or precipitating some change on the Egyptian side. To have a company that's actually saying the new rules aren't ready and we'd like to use the old ones -- I thought that was a very bold decision when I first saw it. Impressive.

Javier Orduña: We believe that the reforms are going to happen and they're gonna be a major step forward. We can't be 100% sure -- you can never guarantee that but everything is pointing in that direction. There clearly are people in the system who have vested interests and don't want it to change, which is why it's dragging out, but we believe it is going in the right direction. The fact that Endeavor is interest adds a lot of weight to that interpretation, but we have a concession agreement with a timeline on it. We can't sit around saying it's gonna be great -- it's gonna be fine. We have to look after ourselves and secure our license under the terms that exist as they are. As and when they change, we will look to change them if they're better but we do need to secure the license now. We believe it will be hugely beneficial for us in terms of being able to raise money to do the work which we want to. It's been a very frustrating year -- we want to get back drilling at Rodruin. We have many plans but we haven't been able to go and drill. What we've been doing is looking at all the areas and really finalizing our assessment of the whole concession and selecting the areas that we want to retain for exploration going forwards, alongside pushing forwards the exploitation lease at Hamama.

Peter Bell: Good work. Thank you very much, Javier.

Javier Orduña: Thanks, Peter. It's good to catch up.


Learn more in a recent Q&A with Mark Campbell, the CEO of Aton Resources. https://ceo.ca/@newton/markcampbell-ceo-aan-guy-qa-2019-09  Thanks again @Guy for these earlier questions, too. Please note, this is sponsored content.

Watch a new interview with Javier Orduña discussing news from SEMNA EAST out today above for more.